It’s hard to imagine a time when you’ll have the entire mortgage paid off. As exciting as it sounds, the thought of tackling such a large debt can also feel extremely overwhelming. There’s an old adage that says, “How do you eat an elephant? One bite at a time”. Here are a few ways you can accomplish this monumental goal and pay off your mortgage early.
Switching from a monthly payment to bi-weekly payments is a simple way to pay your loan off faster. E. Napoletano wrote an article for forbes.com explaining the genius behind this tactic. She states, “While this might seem the same as making additional payments, the mechanics are a bit different. Many lenders offer borrowers the opportunity to make biweekly payments instead of one full monthly payment. The upside? You’ll pay off your loan faster by saving on overall interest costs. The downside? Not all lenders offer biweekly payment options.” The article goes on to say, “How much faster could you pay off your mortgage with biweekly payments? On a $250,000 30-year fixed-rate mortgage at 3.5%, you’ll pay off your mortgage four years early and save more than $20,000 in interest.” This is a significant amount of time shed off your loan as well as your interest amount. Find a lender that offers this free service and work towards saving money in the long run.
Interest rates are very low right now. Take advantage of them. Even if you already have a low interest rate, it’s worth asking your lender about refinancing. Going down a couple percentage points on your interest rate will likely save you more than a hundred dollars. You’d be hard pressed to find someone who couldn’t benefit from an extra hundred dollars or more each month. If you’re not interested in going through the refinancing process, you can pretend that you already did. What does this mean? It means paying a double mortgage payment each month. This will essentially cut a 30 year mortgage down to 15 years. It’s a very simple tactic that will definitely help you pay your home off faster.
Always Pay Extra
Commit to paying extra money towards your mortgage every month. Not only will it help you develop positive financial habits, it can shave years off your loan. It doesn’t have to be much. You may be able to pay more some months vs. others. The point isn’t how much extra you’re paying, it’s more about the motion of doing it. You’d be surprised how much an extra $15-$50 can impact your principle over time. If you aren’t sure how much extra to pay, try rounding your mortgage payment up to the nearest hundred dollars. For example, if you’re mortgage is $1365, pay $1400.
Owning your home outright is a major accomplishment. It takes time, patience and perseverance. Keep plugging along! Your small efforts will add up to huge savings at the end of your loan.